Italy's Fiat unveiled a deal to take a 35 per cent stake in struggling automaker Chrysler LLC as France weighed plans for an emergency aid package for its own battered auto industry and Toyota Motor Corp named Toyoda family scion to lead the company.
In Detroit, an US auto supplier executive called for a bailout for the parts industry, saying the sector needs between $5 billion to $10 billion in government aid to survive a cash crisis in the next few months.
The plea from Dura Automotive Systems Inc Chief Executive Tim Leuliette, who said the US supply base faces severe borrowing issues in February, underscored the growing stress in the auto industry that is grappling with the fallout from the credit crisis and the steep plunge in vehicle sales.
To improve its chances of survival and remain viable, Chrysler yesterday announced it has a non-binding agreement with Fiat that would give the US automaker access to Fiat's more fuel-efficient vehicle platforms and would help it move into markets where currently does not have a presence.
The alliance also would pave the way for Fiat to market its vehicles in the United States, which is still the largest car market in the world despite a steep downturn that has now spread across Europe and Asia.
In France, politicians struggled to fashion a coordinated response to the hard hit sector and put together a bailout for the industry. French Prime Minister Francois Fillon said his government was considering an aid package for the country's carmakers worth €5 to 6 billion.
"I think all European governments share this opinion ... There is an emergency. We need a massive response on the automobile sector's financing," he told a French car industry summit, adding that a package could be announced soon.
German Chancellor Angela Merkel was critical of aid to auto companies, warning that state bailouts risked distorting competition and did not offer a long-term solution to the crisis.
Meanwhile carmaker BMW said it would scale back production and cut back working hours for 26,000 of its German staff in February and March as sales drop.
Reuters/Bloomberg